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Reconceptualizing the Firm in a World of Outsourcing and Offshoring: The Organizational and Geographical Relocation of High-Value Company Functions

Published on Dec 1, 2010in Journal of Management Studies 5.33
· DOI :10.1111/j.1467-6486.2010.00945.x
Farok J. Contractor27
Estimated H-index: 27
(RU: Rutgers University),
Vikas Kumar29
Estimated H-index: 29
(USYD: University of Sydney)
+ 1 AuthorsTorben Pedersen45
Estimated H-index: 45
(CBS: Copenhagen Business School)
Abstract
In the largest sense, global strategy amounts to (1) the optimal disaggregation or slicing of the firm's value chain into as many constituent pieces as organizationally and economically feasible, followed by (2) decisions as how each slice should be allocated geographically (‘offshoring’) and organizationally (‘outsourcing’). Offshoring and outsourcing are treated as strategies that need to be simultaneously analysed, where just ‘core’ segments of the value chain are retained in-house, while others are optimally dispersed geographically, as well as dispersed over allies and contractors. This amounts to a reconsideration of the nature of the firm that captures the dynamic changes in global configuration and a reconsideration of what constitutes ‘core’ activities that need to be retained internally. The article proposes a new research agenda that searches for each firm's optimal degree of disaggregation and global dispersion given that further scattering of value chain activities entail benefits as well as increased complexity and costs.
  • References (51)
  • Citations (314)
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References51
Newest
Published on Aug 1, 2011
Jay B. Barney56
Estimated H-index: 56
,
William S. Hesterly16
Estimated H-index: 16
PART ONE: The Tools of Strategic Analysis Chapter 1 What Is Strategy and the Strategic Management Process? Chapter 2 Evaluating a Firm's External Environment Chapter 3 Evaluating a Firm's Internal Capabilities PART TWO: Business Level Strategies Chapter 4 Cost Leadership Chapter 5 Product Differentiation PART THREE: Corporate Strategies Chapter 6 Vertical Integration Chapter 7 Corporate Diversification Chapter 8 Organizing to Implement Corporate Diversification Chapter 9 Strategic Alliances Chap...
190 Citations
Published on Dec 31, 2010
John H. Dunning62
Estimated H-index: 62
,
Sarianna M. Lundan14
Estimated H-index: 14
This is the second edition of the celebrated volume by Professor John H. Dunning, first published in 1993, which has now been not only updated but also enriched with the addition of a number of new topics. This addition was not least due to the expertise of the co-author, Sarianna Lundan, in the institutional aspects of international business and the internal governance of transnational corporations (TNCs). It is a comprehensive synthesis of all the theories in International Business based on ex...
4,226 Citations Source Cite
Published on Dec 1, 2010in Journal of Management Studies 5.33
Susan M. Mudambi17
Estimated H-index: 17
(TU: Temple University),
Stephen Tallman25
Estimated H-index: 25
(UR: University of Richmond)
Outsourcing knowledge and innovation activities offer cost savings and superior performance, but can also put a firm's unique resources and capabilities at risk. Characterizations of outsourcing as a make-or-buy decision do not fit well with decisions on knowledge process outsourcing (KPO). KPO is a make-or-ally decision, as firms seek a governance structure that will both protect and leverage their strategic knowledge assets, with the final decision often coming down to a choice between differe...
150 Citations Source Cite
Published on Dec 1, 2010in Journal of Management Studies 5.33
Yuan Li33
Estimated H-index: 33
(SJTU: Shanghai Jiao Tong University),
Zelong Wei10
Estimated H-index: 10
(Xi'an Jiaotong University),
Yi Liu27
Estimated H-index: 27
(SJTU: Shanghai Jiao Tong University)
From the perspective of the vendors in emerging countries (VECs), this article investigates how the vendor firms in China respond to cross-border outsourcing trends differently by examining the different effects of entrepreneurial orientation (EO) and market orientation (MO), as well as their interaction, on local vendors' acquisition of knowledge from foreign outsourcers in cross-border outsourcing. We find that the knowledge acquisition of the vendors positively affects firm performance. Thus,...
84 Citations Source Cite
Published on Dec 1, 2010in Journal of Management Studies 5.33
Ram Mudambi42
Estimated H-index: 42
(TU: Temple University),
Markus Venzin9
Estimated H-index: 9
(Bocconi University)
One important effect of the increasing integration of the world economy is the rising importance of possibilities to offshore and outsource value-creating activities. In many industries, firms are able to disaggregate their value chains into smaller parts. This process allows for a less path-dependent approach to the firm's ideal location profile (through offshoring and relocation) and control strategies (through outsourcing). This article argues that optimal decisions regarding individual proce...
180 Citations Source Cite
Published on Dec 1, 2010in Journal of Management Studies 5.33
Christoph Grimpe17
Estimated H-index: 17
,
Ulrich Kaiser18
Estimated H-index: 18
(UZH: University of Zurich)
The outsourcing of research and development (R&D) activities has frequently been characterized as an important instrument to acquire external technological knowledge that is subsequently integrated into a firm's own knowledge base. However, in this paper we argue that these ‘gains’ from R&D outsourcing need to be balanced against the ‘pains’ that stem from a dilution of firm-specific resources, the deterioration of integrative capabilities and the high demands on management attention. Based on a...
273 Citations Source Cite
Published on Jan 1, 2010
Pooja Thakur1
Estimated H-index: 1
A Dissertation submitted to the Graduate School – Newark Rutgers, The State University of New Jersey in partial fulfillment of the requirements for the degree of Doctor of Philosophy Ph.D. in Management Written under the direction of Prof. Farok Contractor And approved by _______________________________ _______________________________ _______________________________ _______________________________
4 Citations Source Cite
Published on Jan 1, 2010in Journal of Management Studies 5.33
Mehmet Demirbag25
Estimated H-index: 25
(University of Sheffield),
Keith W. Glaister31
Estimated H-index: 31
(University of Sheffield)
This paper examines empirically the determinants of offshore location choice between country clusters. Based on a dataset of 1722 R&D projects by MNEs located in developed and emerging countries, we examine the impact of home and host country, industry, and firm level variables on choice of location. We draw on the extended OLI paradigm to develop our hypotheses. Using the EU15 as a base group, a multinomial logit model is estimated between the regions of USA&Canada, Eastern Europe&Russia, emerg...
131 Citations Source Cite
Published on May 1, 2009in Journal of Management Studies 5.33
Paul E. Bierly22
Estimated H-index: 22
(JMU: James Madison University),
Fariborz Damanpour25
Estimated H-index: 25
(RU: Rutgers University),
Michael D. Santoro20
Estimated H-index: 20
(Lehigh University)
A firm's ability to acquire and exploit external knowledge is often critical to achieving and sustaining a competitive advantage. In this study, we adopt a multi-dimensional view of absorptive capacity and focus specifically on the application of external knowledge that has been obtained via university-firm collaborations. We examine various organizational conditions that we propose influence a firm's ability to apply external knowledge for explorative and exploitative innovations. We collected ...
228 Citations Source Cite
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Estimated H-index: 10
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Estimated H-index: 22
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Camila Balbontin3
Estimated H-index: 3
(USYD: University of Sydney),
David A. Heshner76
Estimated H-index: 76
(USYD: University of Sydney)
ABSTRACTDecisions made by businesses on where to locate or relocate are typically given less consideration than residential location in integrated transport and land use modelling systems. This is surprising given the important role that businesses play in defining employment opportunities, and hence the travel patterns of workers and any travel associated with accessing firms. As part of a larger study on giving firm location choices an endogenous representation in an integrated model system, t...
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Lauri Haapanen1
Estimated H-index: 1
(University of Oulu),
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Estimated H-index: 19
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+ 1 AuthorsPertti Paakkolanvaara1
Estimated H-index: 1
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Abstract In mergers and acquisitions, the acquiring firm must combine two firms’ resources and capabilities so that the outcome yields value. In individual firms, the marketing & sales, and R&D functions have typically developed intertwined and complex relationships over time. These multifaceted dependencies may obscure the integration of the firms and their functions. In order to reveal to what extent cross-functional relationships determine the success or failure of an acquisitions, we have ma...
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Andrea Szalavetz4
Estimated H-index: 4
(MTA: Hungarian Academy of Sciences)
Abstract This paper investigates whether advanced manufacturing technologies (AMT) can modify the patterns of upgrading in manufacturing subsidiaries operating in FDI hosting factory economies. Does the digital transformation of local manufacturing engender the accumulation of local technological and R&D capabilities, or the beneficial impact of AMT remains confined to production capability? Analysis is based on primary data collected through in-depth interviews with a sample of high-flying manu...
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Alfredo Valentino1
Estimated H-index: 1
(Libera Università Internazionale degli Studi Sociali Guido Carli),
Jan Schmitt1
Estimated H-index: 1
(WU: Vienna University of Economics and Business)
+ 1 AuthorsPhillip Christopher Nell13
Estimated H-index: 13
(WU: Vienna University of Economics and Business)
We investigate the effect of changing national institutions on relocations of intermediary HQs. Using a dataset of 154 cross-border relocations between the period from 2000 to 2015, we draw on the intermediary HQ's middle position within the MNC and investigate how a decrease in institutional quality in the HQ's host country and a change in institutional distance between different MNC units affect the relocation decision. Our findings advance the emergent literature on HQ relocations as well as ...
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Estimated H-index: 5
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Estimated H-index: 24
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Zeeshan Asim , Shahryar Sorooshian9
Estimated H-index: 9
A supporting management discipline is an under researched phenomenon. A majority of firms’ operating capabilities relating to knowledge, innovation and technology management as a supporting management discipline. This paper reviews the literature in the research and development (R&D) domain to formulate and propose a conceptual model which is influenced by capabilities relating to knowledge, innovation and technology management. We performed a systematic literature review in which a range of art...
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